How China's startup game is different

May 04, 2015 12:11
A mainland entrepreneur puts up a sign "looking for business partner" in the Zhongguancun Innovation Street. It is not an uncommon scene in the famous startup street in Beijing. Photo: China Daily

For young wannabe Chinese entrepreneurs, Alibaba Group founder Jack Ma is a key role model.

"Everyone should have a dream. What if it is realized?" -- the comment made by Ma last year upon Alibaba's hugely successful New York listing has now become entrenched in the minds of the youth.

Reminded of the possibilities and the rewards of entrepreneurship, many youngsters who pursue overseas studies are opting to return home after graduation.

The so-called "returning sea turtles", or Haiguipai “海歸派” , enjoy some recognition as they seek to develop their careers in mainland China, but they also confront some unique problems.

Take the case of Chen Guang, who passed out from Stanford University with two Masters degrees in economics and computers. Chen successfully sold a self-developed system for real-estate agency in the US before moving back to China.

As a Chinese, Chen wanted to develop his career in his home country.

Give an impressive portfolio, Chen and his team were chosen by Binggo Café, an incubator which trains startups and help them get funding, to join their program last May.

Chen and his six team members have chosen to focus on the field of early childhood education. He wants to develop a product that will help babies and toddlers to learn.

In order to get funding, Chen took every opportunity to meet with potential investors. He joined all road shows and meetings organized by Binggo, but found that not a single angel investor was willing to bet on Chen's startup.

After several rounds of attempts, Chen started to realize what his problems are.

"As I am a Haigui, people would think that I do not have a deep understanding of the Chinese market. What's more, who would believe in an early childhood education product developed by unmarried guys? But most important of all, I don’t have any connections, the whole thing would be so much easier if you fundraise within your alumni circle," Chen told Caixin magazine.

The Binggo café mentioned above is one of 23 startup platforms and incubators located in the Zhongguancun Innovation Street in Beijing's Haidian district. Over 4,000 startup teams have gathered on this less-than-300-meters-long street.

Qin Jun is the founder of Binggo Café. She is also the president of Tsinghua Technology Innovation Holdings, the group that manages the Innovation Street with Beijing Haidian Property Group.

"Most of the entrepreneurs here are looking for connections," Qin said frankly.

In other words, it is not really about what you know but who you know that matters in mainland’s startup world.

When Chen began feeling frustrated and hopeless about his startup and career prospects, well-known angel investor Xu Xiaoping from the Zhen Fund gave a nod to the project. Chen finally secured the funding that he had been desperate for.

But the journey wasn't easy. Chen can, in fact, be considered to be a lucky one among the hordes of aspiring entrepreneurs.

Chen's experience can be best summed up by the remarks of Wang Qiang, an entrepreneur mentor who said: "Overseas entrepreneurs spend 80 percent of time on developing their products, and use the 20 percent time left to build relationships with others, while the case is totally opposite in China."

"This is China, you have to adapt to it even if you don’t want to," Chen exclaimed.

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EJ Insight writer